State commits to crafting a fix to broken VLF process; Mueller and Speier say the work isn’t done

The California Legislature has taken its first formal step toward working on a fix for the broken Vehicle License Fee adjustment amount (VLF) funding mechanism that continues to short San Mateo County and its 20 cities hundreds of millions of dollars annually, but local leaders say acknowledgment alone won’t cover a payroll or keep a fire station staffed.

This year’s state budget trailer bill, AB 184, states the Legislature’s intent that the State work collaboratively with San Mateo, Mono and Alpine counties, their cities, and other affected jurisdictions to craft a mutually agreeable legislative and fiscal solution for the VLF shortfall, beginning in FY 2027-28 and extending statewide to any jurisdiction facing similar losses in the future.

The shortfall has nearly doubled in a single year, growing from roughly $119 million in FY 2024-25 to approximately $226 million in FY 2025-26, a loss that threatens public safety, public health, mental health and other essential services across the county’s 21 jurisdictions.

“We have been clear from the beginning that we are not asking for special treatment. We are asking for equal treatment,” said San Mateo County Supervisor — and former Menlo Park Mayor — Ray Mueller. “This new language gives us an important opportunity to work toward a permanent solution. We appreciate our state delegation Assemblymembers Diane Papan and Marc Berman, Senator Josh Becker, our labor partners, cities and community organizations that helped bring us to this point. Now it’s time to turn intent into action and fix this.”

“While we appreciate that the State has formally acknowledged the problem and expressed a commitment to finding a solution, intent language does not restore a single dollar of funding to the communities that are owed it,” said San Mateo County Supervisor Jackie Speier. “There is no reason to wait for a solution. We need this resolved before Governor Newsom leaves office. Every day we delay, our local governments, public employees, community organizations and the people they serve face damaging uncertainty over the funding they depend on. Our communities need certainty, and they need it now.”